Victorian hospitals are preparing to reschedule elective surgeries and reopen beds following the reinstatement of federal funding - but say jobs are gone for good.
The federal backdown has provided a reprieve for Casey Hospital in Berwick, which will not proceed with plans to close its emergency department overnight.
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The Federal govt's Victorian health funding package flags a push from other States for similar treatment. Opposition says it's a 'jurisdictional nightmare' in the making.
Victorian hospitals had been implementing plans to cancel thousands of elective surgeries and close about 350 beds following a $107 million reduction in expected federal funding this financial year.
Royal Children's Hospital chief executive Christine Kilpatrick said 12 jobs made redundant in January would not be reinstated. Uncertainty remains about a further 38 jobs the hospital was due to axe through redundancies and existing vacancies.
Professor Kilpatrick said she was trying to find out when and how the hospital would receive $3.6 million previously cut from its budget.
The reinstatement of the $107 million did not bring political peace. In developments:
■ Prime Minister Julia Gillard blamed the bed closures and surgery cancellations on ''a grand act of incompetence'' by Premier Ted Baillieu.
■ Mr Baillieu hit back, saying the reinstatement was a ''political stunt'' and that the same problem would re-surface in the next financial year.
■ It emerged that the Baillieu government failed to activate a dispute resolution clause in the national health funding agreement.
■ Ms Gillard threatened other states with ''rearrangement'' of their budgets if they withheld health funds.
■ A senior federal source said bypassing the Baillieu government by providing the funding directly to health service providers could be viewed as a ''partial takeover'' of the health system by the Commonwealth.
■ Greens health spokesman Richard Di Natale demanded Canberra reinstate funding to other states.
Federal Health Minister Tanya Plibersek, visiting Casey Hospital, said the state government had been cruel in passing on the cuts and stood by the recalculation of Victoria's population that underpinned the changes.
Those figures mean Victoria will receive $100 million less in 2013-14, although overall funding will rise.
Victorian Hospitals Association chief executive Trevor Carr said hospitals that had slashed elective surgery in shutdowns over Christmas might struggle to meet targets they had set at the start of the year.
''The public needs to understand this doesn't end the disruption as of today and unfortunately our capacity as a system to deliver everything we hoped for this year has been compromised,'' he said.
Austin Hospital chief executive Brendan Murphy said he expected the hospital would be able ''to ramp up clinical activity to previously planned levels quickly''.
Southern Health chief executive Shelly Park said the health network was planning to reschedule elective surgery, ''acknowledging that this will be gradual''.
Royal Melbourne Hospital chief executive Gareth Goodier said he was waiting to receive payment details before being able to confirm when the hospital would reopen a 25-bed ward and return operating theatres to full capacity.
Other hospitals including The Alfred, St Vincent's, Western and Eastern Health welcomed the funding announcement but said they would need further details before making decisions on services.
With DAN HARRISON and JOSH GORDON